Management consulting firm BearingPoint Inc. has received a subpoena related to some of its federal contracts dating back to 1998, the company disclosed in a recent Securities and Exchange Commission filing.
In an 8-K filed last week, BearingPoint, the former consulting arm of Big Four firm KPMG, said that it received a subpoena from the SEC and requests for documents and information from the U.S. Attorney's Office for the Southern District of California related to certain software resale transactions with San Diego-based Peregrine Systems Inc. between 1999 and 2001.
In November, former BearingPoint employee Larry Rodda pled guilty to one count of criminal conspiracy in connection with the transactions that are the subject of the government inquiries. Rodda also was named in a civil suit brought by the SEC. The company said that it was not named in the indictment or civil suit, and that it is cooperating with the government investigations.
The McLean, Va.-based company has also been named as a defendant in several civil lawsuits regarding the Peregrine software resale transactions, in which Peregrine shareholders allege that the consulting firm participated in a fraudulent scheme by Peregrine to inflate its stock price.
The company is also cooperating in an ongoing investigation of the Core Financial Logistics System project by the Inspector General's Office of the Department of Veterans' Affairs (VA IG) and the U. S. Attorney for the Central District of Florida. BearingPoint said that it doesn't believe it is a subject or target of either investigation.
The company, which has been issued two subpoenas so far seeking documents relating to the CoreFLS project, said that it is continuing to cooperate with the investigation, and noted that neither the Inspector General's office nor the U.S. Attorney has made any contractual claims or allegations of wrongdoing against it.
"We believe that we complied with all of our obligations on the CoreFLS contract. An earlier report by the VA IG, dated Aug. 11, 2004, has not identified or alleged any criminal conduct on our behalf," the company said.
The company also warned in the same filing that it may be unable to complete all of the work to present its report on internal controls required by Section 404 of Sarbanes-Oxley or to conclude that its internal controls are effective.
The disclosures follow a recent management shuffle at the consultancy. Last month, chief executive Randolph C. Blazer resigned suddenly and chief financial officer Robert S. Falcone said that he would retire early. BearingPoint director Roderick C. McGeary, who previously served as the company's co-CEO and co-president, is serving as interim chairman and CEO and is being considered as a candidate for the chief executive position.
